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Mr. Smith, president of William C. Smith Co., which has more than $300 million in developments east of the Anacostia River, has worked with Mr. Gray on public and private real estate deals for years, including construction of the Town Hall Education, Arts & Recreation Campus in Ward 7, which Mr. Gray represented on the council.
The personal relationship between Mr. Gray and Mr. Smith drew scrutiny from city ethics officials last year after The Washington Times reported that a company owned by Mr. Smith had performed repairs at Mr. Gray’s house. The work, which was not ordinarily performed by Mr. Smith’s company, was subcontracted to smaller firms not licensed to do business in the District, and no permits were obtained from the city.
Officials cleared Mr. Gray of ethics violations after determining that he paid market rate for the work - with a check that was posted after The Times questioned the council chairman about it.
Yet as Mr. Smith’s company was performing the work, Mr. Gray voted to approve an $86 million William C. Smith project. He also voted repeatedly in 2007 to approve plans for Skyland Town Center, another William C. Smith project, which is being developed near his home.
In July 2009, as the city was raising taxes to fill a $660 million budget gap, Mr. Gray, in his role as council chairman, gave top legislative priority to a city-subsidized land deal for a project headed by William C. Smith. The transaction was scheduled for a last-minute council vote before members adjourned for their summer recess.
Mr. Smith did not return calls for this article.
A key confidant and Mr. Gray’s closest friend is his campaign manager, Lorraine A. Green, who served as chairman of his transition team in 2006. Ms. Green was a deputy director of the U.S. office of personnel management in the 1990s, after serving as director of the D.C. office of personnel in the Barry administration and as executive director of the D.C. Lottery and Charitable Games Control Board.
Ms. Green’s lottery and personnel experience made her attractive to Mr. Gray last year when he led the council in rejecting a local partner of gambling giant Intralot that had been approved in a formal procurement process.
Former D.C. procurement lawyer and whistleblower Eric W. Payne, who was fired from his job with the office of the chief financial officer and since has sued the city, said Mr. Gray was adamant that Intralot’s first partner not be awarded a share of the lottery pact and that Mr. Gray pressured Chief Financial Officer Natwar M. Gandhi to replace the firm with the existing local partner at the time.
The lottery contract eventually went through a second round of bidding, with Ms. Green vying for the contract along with a different local investment group that later was disqualified.
Ms. Green and Mr. Gray in 2007 founded the 501(c)(3) charitable organization One City Foundation Inc. The group’s purpose is “promoting unification among residents of the District of Columbia.” It is unclear whether it has ever raised or spent funds. It has not filed Internal Revenue Service Form 990, for federally tax-exempt organizations, since it was established.
The D.C. Lottery contract eventually included a local company headed by Maryland businessman Emmanuel S. Bailey, who met with Mr. Gray along with Intralot’s lobbyist before the council scuttled the first contract award. The D.C. inspector general’s office is investigating the approval process of the lottery contract.
In deflecting questions about whether he steered the lottery contract to Mr. Bailey, Mr. Gray has said he abstained from the final vote. Before that vote, Mr. Gray said he was “mightily impressed” with Mr. Bailey. The Gray campaign said that had Ms. Green been awarded the contract, he would have “recused himself.”
“I heard Lorraine Green’s name throughout the process,” said Mr. Payne, who was fired before the second round of bidding began.
Another local bidder on the lottery contract told The Times on the condition of anonymity that a member of Mr. Gray’s inner circle made it known early on that Mr. Gray’s support for a lottery deal could be secured if Ms. Green was involved.
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